However, a poor economic backdrop and rising COVID-19 cases in China are weighing on the demand outlook ahead, while the availability of Brazilian supply draws closer, said the UK based analysts.
At a combined 43.1Mt, US exports and outstanding sales are outpacing last season by 1.79Mt, they noted.
“However, with a 3.2Mt smaller crop, stronger domestic consumption and projections for already tight stocks, the pace of exports will soon be unsustainable.”
The US Department of Agriculture (USDA) expects exports to reach 55.66Mt this season, 3Mt lower than last season, a figure which would leave ending stocks below 6Mt.
“As we move through Q1 , the US will remain the only major source of soybeans with Brazil in the final months of the drought impacted 2021/22 season. As such, export demand for US soybeans continues to risk depleting US stocks throughout Q1.”
The end of Q1 will bring about the Brazilian soybean harvest, anticipated to break records at 152Mt, up 25Mt from last season, said the oilseed market specialists.
With the arrival of the Brazilian crop, export demand for US soy will decline, likely removing the current bullish market support, they forecast.
“However, it isn’t all bearish news from South America, Argentina continues to suffer from the prolonged drought impacts of La Niña with soybean planting delayed due to arid conditions. As a result, the full intended area is unlikely to be planted and late planted soy risks lower yields due to development occurring during less sunshine hours as the days start to get shorter, which should lead the USDA to reduce their production estimate in this month’s WASDE.”
Rapeseed markets inch higher
Meanwhile, the team noted that, over the last two weeks, rapeseed markets have inched higher, pushing up to €600/t in a late year recovery.
“We were surprised at the speed of the November sell-off and the partial recovery amid what remains a very volatile market, but we do now question the longevity of this rapeseed market recovery. Consequently, we expect rapeseed prices to average €550/t (US$580.7/t) in Q1.”
While the rapeseed market rally and recovery coincided with the slowing importation of rapeseed from Ukraine, supplies from Australia are now starting to build, said the CRM Agri experts. “Additionally, as highlighted throughout 2022, the return of Canada as a major global exporter of canola also represents a large downside risk in 2023.”
Despite those developments, overall, 2023/24 risks being a physically tighter market, they stressed.
“The war in Ukraine continues to present an uncertain domestic supply situation and while exports of rapeseed are drawing to a close, planting for havest-23 has been severely impacted, and production is expected to fall by as much as 1Mt. Australia too will be a key focus in 2023 with the end of what has been a highly beneficia lLa Niña, which has brought above-average rainfall to Australia and enabled consecutive years of record production. With a fading of La Niña, we anticipate an end to the record-breaking production streak.”